Starting off daytrading....(advice required)

[undertaker]

Hi there,

This is my first post (I’ve been lurking around reading posts though).

Anyway, my situation is this - I’m seriously considering giving up the day job to start day trading. However, before I fully jack it in I’ll give it a 3month trial run by taking some unpaid leave (that way I always have the option to return if it doesn’t work out).
Furthermore, I’m fortunate enough to not have any dependents.

I have enough cash to cover my mortgage payments + living for a year (plus investments in shares which I could dip into too). – so not too concerned about that side of things.

I’m going to start off with a £5k pot (yes I know its small), and initially use spreadbets on Indices (FTSE, SMI, NDX, S&P, DAX) and UK/US shares. I’ll be risking a max of 3% per trade controlled via stop-losses.
I’ll be using the Trendsignal charting system (with ESignal realtime feed).

My questions to some of you experienced guys is this (all answers/advice much appreciated):

1) SB company – I was originally going to use Deal4free, but have been reading some good stuff about Capital spreads. What’s the consensus view?
2) I’ve been reading the thread about Taxation – and am still none the wiser! As this will be my sole source of income do I still need to worry about tax (CGT + Income), despite the fact that I will be SB’ing?
3) How do I set myself up? (sole trader or company)? Can anyone recommend any decent accountants who specialise in this area, who could perhaps advise? (need to keep costs down though!) – I guess this links in with (2).

Any advice in these areas would be greatly appreciated!

Regards,

Undertaker

 

[TheBramble]

Welcome to t2w.

A few people would suggest you didn't jack in the day job, but if you've got enough funds to support yourself - why not.

Others will suggest why not paper trade for a few months. It's a good idea, and I'd certainly go that route first if I were you, but there's no substitute for the real thing.

SBs aren't the best vehicle in terms of commissions, spreads and mickey-mouse antics they are alleged to adopt sometimes. However, as a trader start-up, they will offer good practise. I'd still recommend that you get a proper broker.

£5K isn't enough to trade effectively as a full-time day-trader. It'll do fine for your practise run.

3% is IMO way too large a risk per trade. If you're using an SB, get the one (can't remember which) that does sub-£ bets. Limit your trades to 1% or less of your trading capital. You'll last longer - and that's the name of the game in the beginning. (Actually, not just the beginning....).

Taxation. Don't worry about it just yet.

As for limited company, accountants etc. Ditto.

Just trade.

 

[neil]

What is your current salary?

 

[Robertral]

Why don't you paper trade first fora month...if u make P then use your cash....if not, go back to work.......
I use cantors, check them out

 

[Tileman]

Hi,
I dont think you will know in just 3 months whether its going to work out or not,you need more time to gather enough experience to become consistant.I am in my second year of daytrading and have winning months and losing ones,one thing i have done is to keep my stakes small to preserve my capital whilst learning.I think it could be a longer journey than you think.All the best.

 

[undertaker]

thanks for the replies chaps.

I will paper trade for 1 month just to get used to the trendsignal system - and then trade for real for the following 2 months.

Work - Its not so much the money its about doing something different and exciting (+ for myself rather than a firm) - I currently have no motivation at work and need some time out!

As I'm in IT I'm quite confident that I'll be able to walk into something next year if things went pear shaped.

I realise that SBing isn't the best method - but for ease of acces to markets + bearing in mind I'm only small fry it seems to be the easiest option.

Thanks again

 

[Martin1973]

Believe in yourself!

Undertaker - Go with what makes you happy, after all we only have one chance at it. Yes trading can be seen as a risky business to those on the outside and indeed sometimes it can be for those without a stratergy but alot comes down to very basic issues such as common sense, discipline, and patience. Take on board practical advice from this forum and believe in yourself! The Trendsignal package should hopefully give you a good head start.

The best of luck.
Martin

 

[undertaker]

Cheers Martin1973 - do you use trendsignal? (Real time or eod)?

If so, how have you been getting on with it?

cheers again.

 

[Martin1973]

Cheers Martin1973 - do you use trendsignal? (Real time or eod)?

If so, how have you been getting on with it?

cheers again.

Will be sending a PM to you Undertaker.

 

[markjpwill]

I realise that SBing isn't the best method - but for ease of acces to markets + bearing in mind I'm only small fry it seems to be the easiest option.

Thanks again

You can open a futres account for £1450 - why handicap yourself by SBing? Seems to me that futures trading has to be easier - by definition a tighter spread makes profits easier to come by. An accountant can take care of the tax (well mine has done a good job anyway).

 

[Trader333]

Whilst I only use direct access to trade so I do not use spredbetting firms, I can see an obvious reason why people starting out do use them and that is the amount per point that you can trade at. Generally the SB companies will allow £1 per point and some even as low as 1p per point to start with. If you compare this to a futures account then the FTSE is £10 per point the Dow (YM) $5 per point and the Emini is $50 per point. It is therefore easier, and cheaper depending upon your chosen instrument, to use a SB company when starting out.


Paul

 

[undertaker]

thanks again for the replies. I'm only starting off small so feel comfortable using SBs.

Plan is to then move to futures and CFDs (depending upon capital base/costs).

 

[zarif]

Undertaker:
Full time trading is by no means easy, But that does not mean it cant be done.Three months is not enough time-but then again you have to sttart sometime.
Re:capital spreads -the spreads are tight and you can bet £1/pt -so a good way to learn-but the downside is that the prices dont update fast enough.
5k -is not enough -but than again what is. I would say you are better off looking at other pastures where the margins and spreads are small.
You say u use trendsignal .Which do u use EOD or realtime? If you have a chat with Jerry Miller they have a company called TWO WAY TRADE and the spreads are minimal.Also you dont need that much capital to start.
Have you ever thought about adding Forex to your list of trading as the moves are quite big.

If you want send me an internal mail and we can chat.

rgds
zarif

 

[donaldduke]

Dont try and day trade with an SB account.
SB accounts are only good for 1 trade a day max, anything more than that and the spread
will start hurting you.

If you want to do daytrading for a living then you need to be as professional as you can be.

That means trade like the Pros.. How many Pro day traders do you know who use SBs?
You can bet there are 10 sucessfull DAT day traders for every successfull SB day trader.

Dont think because you are trading small its OK to use SBs. Youll lose your money
and it will take you years to recover your positive attitude.

5K forget it. Lets say you make 100% in your first year. Thats only another 5K,
this gives you a pot of 10K in your second year when your other funds have dried up?
How you gunna live in your second year!?!

Do you really think you can make more than 100% a year , in your first few years as a trader?

 

[undertaker]

point taken - I will investigate CFDs + Futures!

I'm also raising my starting pot to £10k.

 

[Naz]

If you want to do daytrading for a living then you need to be as professional as you can be.

That means trade like the Pros.. How many Pro day traders do you know who use SBs?
You can bet there are 10 successful DAT day traders for every successful SB day trader.

There's a difference between trading part time whilst holding down a job and doing it for a living. Whilst trading part time with the odd trade here and there sb'ing is fine,just a bit of fun but move up a level and i think you need the best tools available.That for me is Direct access trading.

 

[undertaker]

thanks for the advice here chaps.

I am currently in the process of setting up a futures account with twowayfutures (vi IB) I will start by trading FTSE, SMI, DAX, NDX, S&P (more than enough there to begin with I think!), depending on how I get on with these I will thne venture into CFD's for shares, etc.

I put my request in for a 3 month sabatical on Friday to start end July. If this "trial" period of trading goes well I will not return back to the day job!

 

[oatman]

That's a bit of a handful to start off with. I would advise you to select one and study it's characterisics closely.

 

[shakeastickat]

Hi Undertaker , my own plans are very similar to yours, diff being a smaller pot and 3 month salary in the bag I will s,b the dow index only with "Trendsignal"and i,q feed to help me along I only plan 1-2 trades a day depending on market volatility,my question is a lot of the replys talk money whereas my targets are points per week/month and if I can achieve them the money side will take care of itself? ( a brief ppost as I seem to have lost my first attempt )

 

[TheBramble]

my question is a lot of the replys talk money whereas my targets are points per week/month and if I can achieve them the money side will take care of itself?

A good question Greg. By itself, the answer is, probably not.

Unless you've also got money & risk management in place.

It also depends on how you use your targets. If you set yourself an arbitrary number of points per week/month, what happens when you don't make that target? And even more importantly, what happens when you do?

There might be a tendency to close your positions when you've reached your nominal target for the day/week or whatever, when in fact, you could and should be letting them run.

Out of interest why and how are you setting your targets?